The measures include joint gas purchase, the creation of a Liquefied Natural Gas (LNG) pricing benchmark, and default energy solidarity between member states of the European Union (EU).
The European Commission has proposed a new package of measures aimed at improving stability in European gas markets.
Presented by European Commission President Ursula von der Leyen and other European Commissioners on Tuesday in Strasbourg, France, the measures include joint gas purchase, the creation of a Liquefied Natural Gas (LNG) pricing benchmark, and default energy solidarity between member states of the European Union (EU).
Von der Leyen also emphasized the need to continue efforts to save gas, and invest in renewable energies.
"In the context of the current gas crisis, we stand ready to accompany firms willing to enter into a joint purchasing consortium, subject to safeguards and in line with our competition rules," said Margrethe Vestager, executive vice-president of the European Commission.
The goal of joint gas purchasing is to reduce uncoordinated bidding for gas supplies between the member states, resulting in fairer access to gas and potentially lower prices.
Companies would submit their requests for gas on a bidding platform, and these requests would then be aggregated, and the platform would look for suppliers. The EU member states would be obliged to pool at least 15 percent of their storage filling for the next filling season.
The European Commission has also proposed creating a new price benchmark for LNG, which would better reflect the reality of the current gas market than the existing Title Transfer Facility (TTF) price index.
"The current pricing benchmark is no longer adapted to a market that is shifting from pipeline gas to LNG. We will develop a new benchmark and put in place a mechanism to limit excessive gas prices in the meantime," von der Leyen said on social media.
The temporary spike cap mechanism will manage excess volatility in electricity and gas derivative markets.
Meanwhile, default energy solidarity rules between member states will apply in case of disruption when there is no bilateral agreement in place.
There are currently only six such bilateral agreements between EU member states under the security of supply rules.
The EU is currently battling sky-high energy prices, which are a consequence of the COVID-19 crisis, and the Russia-Ukraine conflict. The EU has therefore vowed to wean itself off Russian fossil fuels while transitioning to green energy.